AT&T Acquires Full Ownership of Otter Media

August 7, 2018

LOS ANGELES — AT&T* has acquired The Chernin Group’s controlling interest in Otter Media, the joint venture between the two companies. Otter Media, a leading subscription, advertising and content company, comprises wholly-owned subsidiaries Ellation, an online subscription video service provider, with offerings under the Crunchyroll and VRV brands, as well as a full-service digital media company, Fullscreen, and its Rooster Teeth brand. Otter also has ownership stakes in global content studio Gunpowder & Sky, as well as Hello Sunshine, a media company founded by Reese Witherspoon.

Otter Media will be a part of AT&T’s WarnerMedia unit and Tony Goncalves, who was appointed Otter CEO earlier this year, will continue to run the company, reporting to WarnerMedia CEO, John Stankey.

"We are thrilled to incorporate the Otter Media brands and talent into WarnerMedia,” said John Stankey, WarnerMedia CEO. “Working with Tony, we look to harness Otter’s expertise in feeding the passion of on-line audiences to augment our portfolio of digital assets and help us further engage, connect and entertain consumers around the globe."

AT&T and The Chernin Group founded Otter Media in 2014 to invest and develop platforms and properties that capitalized on the growth of direct-to-consumer subscription and advertising models, as well as the rise of new digital media brands.

In the four years since Otter Media’s founding, interest in consuming video online and via mobile devices has only accelerated. In that time, the company has established a global audience of more than 93 million unique monthly consumers and is on pace to deliver over 75 billion video views this year. Additionally, the company is one of the top-ten subscription video on demand (SVOD) providers with more than 2 million paying SVOD subscribers.

“From the outset, Randall Stephenson and John Stankey championed the Otter strategy and vision, and AT&T has been an ideal partner in building the business — smart, creative and supportive,” said Peter Chernin, CEO, The Chernin Group. “With AT&T’s direct-to-consumer relationships, vast data and varied content, I believe they can accelerate Otter’s growth. The combination with WarnerMedia will create a new-era media company, serving customers with every type of content delivered through every possible distribution channel.”

“The Chernin Group’s support and expertise has helped us expand Otter’s capabilities and refine our strategy over the past several years, and today’s news is a testament to our team’s dedication to super-serving passionate audiences across multiple platforms,” said Tony Goncalves, Otter Media CEO. “Otter’s digital-native talent pool understands that today’s viewers want their entertainment mobile, social and community-centric. We plan to harness Otter’s talent and scale to engage and entertain fans around the world on their own terms. And we will continue to be agile and nimble — a hallmark of Otter Media’s culture — so we can deliver the digital, social-first content that our audiences want.”

“Otter is delivering on our mission to build a leading portfolio of direct-to-consumer media brands that have passionate fans and a multi-pronged business model,” said Jesse Jacobs, President, The Chernin Group. "With AT&T’s portfolio in media, distribution and content, combined with Tony’s leadership, we believe full ownership by AT&T will take these businesses to the next level.”

The Otter Media companies have built large networks of talented creators and influencers and have deep libraries of video content. The Otter Media portfolio includes Ellation, a transformative entertainment company and home of industry-leading platforms Crunchyroll and VRV. Crunchyroll is a SVOD service that gives millions of fans access to a vast library of anime content. VRV aggregates and distributes content from multiple over-the-top content providers, including Crunchyroll and Rooster Teeth.

Another key part of the Otter Media family, Fullscreen, is a digital media company that empowers talent and brands to build and monetize highly engaged, social-first audiences through best-in-class strategy, creative services and technology. Fullscreen began as a network of creators, social influencers and YouTube stars that is now 4,500 strong. Since its inception, it has diversified to include branded content, traditional advertising and social media marketing.

Rooster Teeth serves up original shorts, series, comedies and animation for a diverse gaming audience through an owned and operated SVOD service and website, as well as by licensing content to third parties.

AT&T’s WarnerMedia unit was created after the close of the Time Warner acquisition in June 2018. The terms of the deal were not disclosed, but it did not have a material effect on AT&T’s first-half 2018 results when the majority of the deal was funded. This acquisition does not change the company’s plan to reduce its net-debt-to-adjusted-EBITDA ratio to the 2.5x range by the end of 2019 and to its historical range by the end of 2022.

Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.